“It’s difficult to get a man to understand something when his salary depends upon his not understanding it.”
— Upton Sinclair
The members of the Texas Legislature are no doubt enjoying their summer recess as millions of Texas homeowners continue their annual trek to the local appraisal district to bargain for relief — any relief — from their spiraling property tax bills. After months of theatrics and discourse about how to best solve the equation of property tax relief and school finance reform, your legislature passed Senate Bill 2, or as they dubbed it — the Texas Property Tax Reform and Transparency Act of 2019.
Calling the latest end product of the Legislature a transparency act is an insult to every homeowner in Texas who just saw their property tax bills go through the roof. Many bills rose by the 10% homestead cap, and some even more as central appraisal districts catch up with years of asset inflation and peg those properties to market value.
Aside from capping the growth of property tax revenue for cities and counties, there is little transparency in SB 2. The entire exercise this year was decidedly opaque, because that’s the way big business wanted it to be. The biggest flaw (a giant black hole) in the property tax code received no mention from the major news media, while the property tax consulting firms and lobbyists in Austin once again had their way with what is essentially a large group of corporate apologists masquerading as public servants.
It’s great that the Legislature finally put an end to the conflicts of interest on your appraisal board, but this is something that should have never been allowed in the first place. That it took your Legislature this long to figure out the obvious is utterly disturbing.
An advisory board appointed by the comptroller is simply another layer of middle management within an incestuous system. They can perform all of the ratio studies they want, but it won’t fix the most egregious aspect of the property tax system. The advisory board can make recommendations until it is blue in the face, but it won’t stop the comptroller from implementing what is unequivocally a two-tier system.
The bane of your local appraisal district contained in section 42.26(a)(3), the remedy for unequal appraisal, is still going to siphon huge sums of money from the property tax rolls as millionaires and billionaires get their assessments dramatically reduced because of this seemingly innocuous language:
“... the appraised value of the property exceeds the median appraised value of a reasonable number of comparable properties appropriately adjusted.”
For the record, I predicted the latest “reform” effort would be largely smoke and mirrors. This was an easy call based on who was heading the reform effort. Sen. Paul Bettencourt runs Bettencourt Tax Advisors in Houston. Anyone who expected a true property tax reform bill and a permanent reduction in their property taxes was burying their heads in the sand in light of this simple fact — a glaring conflict of interest so easy to see that a child could understand it.
If you are viewing the reform effort through the prism of maintaining the status quo, as Gov. Greg Abbott, Lt. Gov. Dan Patrick and Bettencourt were intent on doing, painting over the wood rot probably looks like success. For the Texas homeowners who continue to get buried by a regressive, unaccountable, unequal taxation system, the latest property tax “reform” looks like the can kicking exercise that it was.
The fake transparency from the Legislature was poorly telegraphed, to say the least. It was obvious the bill advertised as “transparency” was going to be completely the opposite when perhaps the best piece of public information on the topic produced during the session was buried by every major news outlet in Texas. Well it is corporate-owned media, so there is that.
I’m referring to the March 26 Texas Tribune article by Shannon Najmabadi that mentioned the gaping loophole in the tax code carved out several decades ago that perpetuates the two-tier property tax system. Najmabadi even called out property tax attorney Jim Popp, the architect of the equity appeal statute.
As Bexar County chief appraiser Michael Amezquita eloquently described it, we now have the “McMansion industry” where money buys due process at your local CAD. Comically, Popp doesn’t view the equity appeal scam as a scam. According to the Texas Tribune article, Popp claims the equity appeal is “not a loophole.”
The actual math screams otherwise. In 2017 there were over 12,000 lawsuits filed against appraisal districts with nearly 11,000 of those using the equity appeal. Less than 1,000 of those suits were filed by single-family homeowners, and the reason is simple.
As Amezquita clearly explained, it is cost-prohibitive to most homeowners. “If you can’t save $3,000 to $5,000 in taxes, what the hell is the point?” Your local CAD understands this very clearly, and that is why you are treated differently as a homeowner and held to a tighter standard of market value. Many appraisal districts will virtually roll over for big commercial owners when they show up with their tax attorneys in tow. The prospect of paying up to $100,000 in attorney fees for a claimant is something the appraisal district does not take lightly. They have to play ball with big commercial property owners, and you, the average homeowner, are left picking up the tab for the game being played every year for the past two decades.
You can rest assured when one of Austin’s most prominent property tax attorneys says a statute isn’t a loophole, it is absolutely a loophole! It is a loophole because the equity appeal is of no use to most homeowners. It is absolutely a loophole, because the equity appeal does not center on market value. It is absolutely a loophole, because it creates a regressive taxation system where those who have the most money can purchase outsized reductions at the appraisal district.
In a year or two, the monumental reform recently passed by your Legislature will be erased by appraisal creep. This is the reality for most Texas homeowners. The fake transparency of SB 2 will come into focus as lawsuits keep piling up in district court. Popp, Bettencourt and the hoard of tax consultants in Texas who profit from the current system will continue to feed from the annual circus. The state comptroller will continue to advertise a transparent system of “uniform and equal” appraisal even though the Legislature has once again prevented it from happening.
Texas still has the best property tax system money can buy.